Changes have been made to the format and content of this publication. Cross-classifications of data included in previous issues may be available on request.

Business counts do not appear in this publication but may be available on request, subject to caveats. See paragraph 4 of the Explanatory Notes for further detail.

DATA QUALITY

When interpreting the results in this publication it is important to take into account factors that may affect the reliability of estimates. These factors are described in the Non-sampling error section in the Technical Note.

There have been significant revisions to data this cycle. See the Revisions section of the Technical Note for further detail.

INQUIRIES

For further information about these and related statistics, contact the National Information and Referral Service on 1300 135 070 or Kirsty Rothenbury on Perth (08) 9360 5382.

SUMMARY COMMENTARY

MAIN FEATURES

EXPENDITURE ON RESEARCH AND EXPERIMENTAL DEVELOPMENT (R&D)

Business expenditure on R&D (BERD) in Australia during 2004-05 was $8,446.2 million. This represented an increase of 10.4% in current price terms over 2003-04 and 7.1% in chain volume terms and was the sixth successive year of increase.

Resources devoted to R&D

1996-97

1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

Expenditure on R&D

Current prices

$m

4 234.7

4 221.1

4 094.7

4 136.7

4 982.6

6 191.9

r6 940.3

r7 648.1

8 446.2

Chain volume measures(a)

$m

5 432.6

5 311.2

5 041.3

4 923.3

5 604.5

6 705.8

7 363.8

7 885.2

8 446.2

Human resources devoted to R&D

PYE

26 412

24 769

25 109

26 507

28 391

32 209

r35 939

r39 027

41 656

r revised

(a) The reference year for chain volume measures is 2004-05. See paragraph 17 of the Explanatory Notes.

Over the five years to 2004-05, BERD increased at an average annual rate of 20.8% in current price terms and 14.3% in chain volume terms.

Business expenditure on R&D

Proportion of GDP

BERD increased as a proportion of GDP between 2003-04 and 2004-05, moving from 0.91% to 0.95%. This continued a period of growth dating back to 1999-2000, when the ratio fell to 0.64%.

BERD as a proportion of GDP(a)

Although Australia recorded one of the largest increases in BERD/GDP ratio of all OECD countries between 2003-04 and 2004-05, it remained below the OECD average of 1.53%. The following table shows BERD/GDP ratios for selected OECD countries.

BERD/GDP RATIOS OF OECD COUNTRIES

2000-01

2001-02

2002-03

2003-04

2004-05

%

%

%

%

%

Sweden

na

3.28

na

2.93

na

Finland

2.40

2.41

2.40

2.45

2.46

Japan

2.12

2.26

2.33

2.36

2.35

Korea

1.77

1.97

1.90

2.00

2.19

United States of America

2.05

2.00

1.86

1.87

1.88

Germany

1.73

1.72

1.72

1.76

1.75

Denmark

na

1.64

1.73

1.77

1.69

Iceland

1.54

1.79

1.76

1.51

na

France

1.34

1.39

1.41

1.37

1.36

Belgium

1.43

1.51

1.37

1.31

1.30

United Kingdom

1.21

1.24

1.25

1.24

1.16

Canada

1.17

1.31

1.18

1.12

1.07

Netherlands

1.06

1.05

0.98

1.01

1.03

Australia

0.72

0.84

0.89

0.91

0.95

Norway

na

0.96

0.96

0.99

0.88

Czech Republic

0.74

0.74

0.75

0.77

0.81

Ireland

0.81

0.77

0.76

0.77

0.77

Spain

0.49

0.48

0.54

0.57

0.58

Italy

0.52

0.53

0.54

0.52

0.54

New Zealand

na

0.42

na

0.49

na

Hungary

0.35

0.38

0.36

0.35

0.37

Slovak Republic

0.43

0.43

0.37

0.32

0.26

Portugal

0.22

0.27

0.26

0.26

na

Turkey

0.21

0.24

0.19

na

na

Greece

0.16

0.21

0.20

0.19

na

Poland

0.24

0.23

0.12

0.15

0.17

Mexico

0.11

0.12

0.15

0.15

na

Total OECD

1.55

1.57

1.52

1.53

1.53

na not available

Main Science and Technology Indicators, 2006/1, OECD, Paris, 2006

Industry

In 2004-05, the largest contributors to BERD were Manufacturing ($3,451.4 million or 40.9% of BERD), Property and business services ($1,609.6 million or 19.1%) and Mining ($1,204.5 million or 14.3%). Of all industries, Mining showed the largest growth from 2003-04, increasing its expenditure on R&D by $226.5 million (23.2%). Other industries recording large increases were Finance and insurance (up $156.6 million or 22.1%) and Manufacturing (up $125.1 million or 3.8%).

BERD, by selected industries(a)

Type of expenditure

As in previous years, BERD in 2004-05 was mainly comprised of Current expenditure ($7,922.6 million or 93.8% of BERD). Current expenditure was in turn comprised of $3,661.8 million in Labour costs and $4,260.9 million in Other current expenditure. Capital expenditure in 2004-05 totalled $523.6 million.

Mining reported the lowest level of Labour costs as a proportion of BERD (14.2%), but the highest proportion of Other current expenditure (79.6%). Retail trade, Finance and insurance and Cultural and recreational services reported the highest Labour costs as a proportion of BERD (all above 58.0%).

At $237.4 million, Manufacturing accounted for 45.3% of all Capital expenditure on R&D in 2004-05. The next highest level of Capital expenditure was reported by Property and business services at $96.1 million.

Source of funds

The Business sector was the main source of R&D funds in 2004-05, with $7,490.6 million (88.7%) coming from Own funds and $227.5 million (2.7%) from Other businesses. Commonwealth government and Overseas organisations were the next largest funders of R&D, at $330.9 million (3.9%) and $315.8 million (3.7%) respectively.

Transport and storage, Construction and Finance and insurance were almost wholly self-funded (all above 99.0%), while Property and business services had the lowest proportion of self-funded research (74.5%).

Type of activity

In 2004-05, the majority of R&D activity was directed into Experimental development (64.5% or $5,446.8 million) and Applied research (30.9% or $2,607.5 million). Applied research showed the largest growth between 2002-03 and 2004-05, increasing by $879.9 million or 50.9%.

Location

Locations in New South Wales and Victoria continued to record the highest levels of BERD in 2004-05, at $3,157.0 million (37.4%) and $2,405.0 million (28.5%) respectively. However, since 2003-04, Western Australia has recorded the highest level of growth, increasing by 36.7% to $1,051.2 million. For the first time since 1998-99, Western Australia's BERD surpassed that of Queensland.

BERD, by location(a)

Manufacturing expenditure on R&D was highest in Victoria ($1,396.1 million), Property and business services in New South Wales ($559.4 million) and Mining in Western Australia ($452.0 million) and Queensland ($354.0 million).

The highest state percentages of BERD as a proportion of Gross State Product (GSP) were in Victoria (1.08%), Western Australia (1.04%) and New South Wales (1.03%).

BERD as a proportion of GSP(a), by location

NSW

Vic.

Qld

SA

WA

Tas.

NT

ACT

%

%

%

%

%

%

%

%

2002-03

0.99

1.04

0.62

1.01

0.69

0.45

np

0.27

2003-04

1.00

1.01

0.64

1.03

0.83

0.51

0.76

0.38

2004-05

1.03

1.08

0.65

0.89

1.04

0.46

0.30

0.42

np not available for publication but included in totals where applicable, unless otherwise indicated

(a) See paragraph 2 of the Explanatory Notes.

Employment size

In 2004-05, businesses with 200 or more employees contributed $5,536.2 million or 65.5% of BERD. This employment size group also accounted for most of the growth in BERD ($736.7 million or 92.3%) between 2003-04 and 2004-05. At the industry level, 93.3% of Finance and insurance expenditure was attributable to this employment size group, compared to 3.8% in Retail trade.

Making the smallest contribution to BERD in 2004-05 were businesses with 0-4 employees ($314.2 million or 3.7%). This employment size group's share of BERD was down 4.3% or $34.4 million from 2003-04. Expenditure on R&D for businesses with 0-4 employees was dominated by Property and business services ($129.3 million) and Mining ($80.4 million).

Socio-economic objectives (SEO)

In 2004-05, as in previous years, the majority of BERD (92.2% or $7,783.5 million) was directed into Economic development. The largest components of expenditure within Economic development were Manufacturing ($3,259.9 million) and Information and communication services ($1,201.0 million). The distribution of BERD across SEOs was largely unchanged from previous years.

Research fields

Accounting for the majority of BERD in 2004-05 were the Research fields of Engineering and technology ($4,820.3 million or 57.1% of BERD) and Information, computing and communication sciences ($2,209.1 million or 26.2%). The distribution of BERD across Research fields remained relatively stable between 2003-04 and 2004-05.

HUMAN RESOURCES DEVOTED TO R&D

Human resources devoted to R&D in 2004-05 totalled 41,656 person years of effort (PYE), an increase of 6.7% over 2003-04.

Industry

In 2004-05, Manufacturing and Property and business services were the main contributors to total human resources devoted to R&D, at 46.3% and 27.1% respectively. Manufacturing and Mining recorded the largest increases in human resources devoted to R&D from 2003-04, up 592 PYE (3.2%) and 590 PYE (59.8%) respectively. In contrast, the largest decrease over this period was recorded in Communications services (down 75 PYE or 9.2%).

Type of resource

Researchers continued to be the main type of human resource devoted to R&D (55.0% of total PYE). Technicians reported the largest growth in human resource effort devoted to R&D, increasing by 1,597 PYE or 14.2%.

Manufacturing and Property and business services reported the highest levels of PYE across all human resource types. Researchers comprised the lowest proportion of total human resources devoted to R&D in Mining (33.2%), and the highest in Communication services (63.4%). Technicians comprised the lowest proportion of total human resources devoted to R&D in Accommodation, cafes and restaurants (23.9%), and the highest in Personal and other services (45.6%).

Employment size

Businesses with 200 or more employees accounted for 22,495 PYE or 54.0% of total human resources devoted to R&D. Businesses with 0-4 employees contributed 1,602 PYE or 3.8% of the total for all businesses.